Having a credit card is the best way to manage your finances. You can cover all your expected costs with the credit limit set on your credit card. However, you must ensure to make online credit card payments online to avoid hefty interest rates. It is possible to miss payments if you have multiple credit card bills with different repayments due and you have not set up autopay.
The adverse impact on a late credit card payment depends on how late the payment is and the terms of the credit card offered to you. You may have to incur late payment fees, penalty interest rates, and even hurt your credit score.
Let us explore what happens when you miss an online credit card payment, the fees you may have to incur, its impact on your credit score, and how to prevent late payments.
Consequences of late payment
The consequences of late credit card bill payment depend on the number of days your payment is due. For instance, if you miss your credit card payment by one day, you may not have to incur losses, as credit card issuers do not report a late payment that is less than 30 days. If you have not paid for more than 30 days, you will have to incur penalties.
Here are the typical results of late credit card payment:
- If you are late on making credit card payments, you may be charged a penalty as high as Rs. 900/- depending on the due amount.
- Making late payments can cause an increase in your interest rate. It will be higher than your regular APR. However, your penalty APR will return to regular APR if you meet specific requirements, such as making more than one payment on time.
- Another impact of late online credit card payment is on the introductory interest-free period. You will lose the offer if you make a late payment.
How does a missed credit card bill payment impact your credit score?
If you miss your credit card payment, you will have to bear serious adverse effects on your CIBIL score. To put it simply, the longer your credit card payment is due, the lower your credit score will drop. If you make frequent 30-day late payments, your credit score will significantly drop by almost 100 points, lowering your credit score from excellent to good, good to fair, and so on.
If you made a late payment for more than 90 days, it will be reported and recorded on your credit report and may be classified as a non-performing asset (NPA). However, the criteria for NPA vary across lenders. Also, a late payment on your credit score will stay there for seven years, hurting your chances of getting a loan in the future.
Things to do if you miss your credit card bill payment
If you miss a credit card payment, it is imperative to be smart and take measures before it hurts your credit report. Follow the underlying advice to minimise the impacts of late payment.
- Pay the minimum as soon as possible
If you missed a payment for less than 30 days, it would not be a big deal. It is an opportunity to prevent it from hitting your credit report. If your late credit card payment is more than 30 days, you can still take some measures to minimise the impact. You will have to pay the minimum as soon as possible. It will save you from losing significant points on your credit score.
- Negotiate your payment
If you have missed your credit payment for the first time, your credit card issuer may waive the late payment fee. There are also credit cards that offer a waiver of the first late payment fee. But, if your card does not have that feature, you can call your card issuer and check if the late payment fee can be waived.
- Avoid missing another payment
If you miss one payment, it may not have a significant impact on your credit score. But, if you make a habit of it, it can have grave implications. So, make sure to avoid missing payments. You can also set up autopay to never miss payments.
How to avoid late online credit card payments?
Following the underlying steps to avoid late payments:
- Set up autopay
An easy way to prevent late payments is autopay. After purchasing your credit card, you can set up autopay instantly and avail of a hassle-free credit card bill payment. You can set up autopay for the minimum payment due, total statement balance, etc. It would be wise to set up autopay for your total statement balance to avoid heft interest rate changes.
- Set payment reminders
If you are not in favour of setting up autopay, you can set calendar reminders or email alerts. You can set reminders when you have an available statement; credit card payment is due in a few days, etc. Keep in mind that these reminders vary across credit card issuers.
- Change your payment due date
If you have more than one bill to pay, you may have to make payments throughout the month. You may not be able to make payments on time. So, it is imperative to adjust your payment due dates based on your needs.
